The First National Broadband Plan

Over the weekend, I published an op-ed in The Des Moines Register encouraging the FCC to heed the lessons of the first national broadband plan, the one Secretary of the Treasury Albert Gallatin sent to Congress in 1808.

Gallatin was a remarkable figure in the early history of the federal government, and his accomplishments include being the longest-serving Treasury secretary (1801-1812) to date. His report on the Subject of Public Roads and Canals, completed at the request of Congress, remains one of the seminal documents in the history of American infrastructure. It is a masterpiece of dispassionate policy-making and clear-headed writing.

Alas, the document is available nowhere online, and the only in-print copy I can find is published by the aptly-named Dodo Press. This is indeed unfortunate given the renewed interest in network infrastructure as a form of national technology. The NBP published in March by the FCC, despite its nearly 400 pages and thousands of footnotes, makes no reference to Gallatin or his plan.

Two hundred years ago, Gallatin’s proposal was audacious. The young Republic, in danger of coming apart at the seams of its already-diverse geography, should commit to building a series of road and canals to knit the continent together from the Atlantic to the Mississippi. The Gallatin Plan called for canals that would connect the inland waterways of the U.S. from Massachusetts to North Carolina, a “great turnpike road from Maine to Georgia,” and improvements, including what would one day become the Erie Canal, to connect the waterways of the Atlantic with the Great Lakes.

The value of roads and canals in improving the communications, safety, and commerce of the young republic were too obvious to enumerate. Indeed, Gallatin wrote, “No other single operation, within the power of the government, can more effectually tend to strengthen and perpetuate that union, which secures external independence, domestic peace, and internal liberty.”

Gallatin estimated his proposed new infrastructure would cost the federal government $20 million. In countries with a “compact population,” he noted, such expenditures might be expected to come from “individual exertion, without any direct aid from the government.” But the vast geography of the United States, its sparse population, and the general poverty of many of its citizens, justified public investment. As the federal government was already in debt, Gallatin advised Congress to borrow the money from future budget surpluses in $2 million increments over a ten-year period. (The surpluses were expected to come from the sale of western lands.)

President Jefferson, elected on a platform of limited federal government, balked at the scale of Gallatin’s ambition, and rejected outright the then-novel idea of borrowing ahead of tax revenues. Gallatin’s plan was kicked around Congress until the War of 1812 reversed Gallatin’s painstaking efforts to retire the federal debt and ended any hopes of massive civilian projects. Construction of the Erie Canal started in 1817; the canal opened in 1825. Like the other projects called for in Gallatin’s plan, it was financed with a combination of state and private money.

The Uniquely American Approach to Infrastructure

Gallatin’s plan may have been the first to call for new national infrastructure, but in both its ambitions and its eventual execution it finds many parallels with other great American infrastructures. These include the construction of the transcontinental railroads, the banking system, electricification, civil aviation, commercial radio, and the build-out of the telephone and telegraph networks.

Those interested in the still-controversial realities as opposed to the myths of how these networks were built are encouraged to read the remarkable series of monographs written by Dr. Amy Friedlander and published by Robert E. Kahn’s Corporation for National Research Initiatives. See http://www.cnri.reston.va.us/.

In short, all U.S. infrastructures inevitably require complicated and delicate private-public partnerships. Private capital, motivated by the hopes of profit, provides the bulk of the investment and absorbs the bulk of the risks. Federal and often local governments provide support in the form of land grants, rights of way, investments in basic research for key technologies, encouraging standards, and financial markets that created liquidity for instruments necessary to finance construction.

(The interstate highway system followed a different model, largely funded by the federal government. The justification—at least officially--for this massive federal program was national defense; the system was built at the height of the Cold War. In that sense, it looks more like a military expenditure than an investment in infrastructure.)

Financing is essential, for infrastructure is characterized by heavy initial investments relative to on-going operating costs once construction is complete. The risk of failure is very real. If you build it and they come, to paraphrase “Field of Dreams,” the network can provide solid profits for generations. If they don’t come, you lose everything. Timing also matters. Traffic may arrive later than you think, by which time you had sold out your investment at bargain-basement or bankruptcy rates, only to watch others ultimately profit from your vision.

In some cases governments provide outright subsidies for populations or geographies for whom the cost of providing service clearly exceeds any hope of profit under a traditional capitalist model.

Serving these communities is important not merely for egalitarian reasons, however, but because of the increasing returns to scale that network technologies offer. The more people who are connected to a network, the faster its value to all participants increases. Many of those who cannot afford access, according to network theory, will contribute value beyond the cost of providing it to them for free or at a price below cost.

For much (much) more, see "Albert Gallatin and the First National Broadband Plan."